Prequalification - A mortgage lender will use information provided by the Buyer including credit, income, assets and debts to arrive at an estimate of how much mortgage the buyer qualifies for. A ‘pre-qual’ from a lender is not-binding because the information provided will not have been verified.
Pre-Approval - This takes the prequalification one step further. The lender will verify all of the items above, and sometimes a few more, and issue a letter stating that the buyer is approved for a specific mortgage amount within a fixed period of time.
It is always best to secure a pre-approval before shopping for property as this will be a very attractive incentive to Sellers.